To: Staff members who are liable to pay income taxes to United States tax authorities on United Nations salaries and emoluments From: The Controller

United Nations ST/IC/2017/4 Secretariat 12 January 2017 English only Information circular* To: Staff members who are liable to pay income taxes to United States tax authorities on United Nations salaries and emoluments From: The Controller Subject: Payment of 2016 income taxes Deadlines for submission of requests for reimbursement of 2016 taxes Staff serving in the United States: 1 March 2017 Staff serving elsewhere: 3 April 2017 Copies of tax returns and related United Nations forms must be received by the Income Tax Unit of the Accounts Division by the above dates. Mail your submission by regular mail or special courier (e.g., DHL, TNT, FedEx, UPS) to the address indicated below. In-person submission may be made from 9 a.m. to 5 p.m. at the address noted below. Inquiries United Nations Income Tax Unit, Accounts Division, Room FF-300 304 East 45th Street, New York, NY 10017 E-mail: tax@un.org (preferred method of communication) Fax: 917-367-1997 Website: www.un.org/tax In person: 3 to 18 April 2017: 9 a.m. to 5 p.m. At all other times: Monday-Tuesday 1 p.m. to 4 p.m. Wednesday 9.30 a.m. to 4 p.m. Thursday-Friday 1 p.m. to 4 p.m. See Announcements on page 2. See Frequently asked questions on page 5. Use the checklist on page 41 to verify the completeness of your submission. * Expiration date of the present circular: 31 December 2017. (E) 180117 *1700525*

Note The present information circular contains important information about the reimbursement of income taxes by the United Nations. Read it carefully, and be sure that anyone who assists you in the preparation of your tax returns reads it also. You will be required to certify as to the accuracy of statements made in your request for reimbursement and to give consent to the Organization to obtain certain verifications directly from the Internal Revenue Service (IRS). This is explained fully in paragraphs 5 to 8. Please note in particular paragraph 7, which defines your responsibility for informing the Organization of any change in your tax liability or filing of amended tax returns for any reason. Tax advice and tax forms: Staff members of the Income Tax Unit are not permitted to provide tax advice to staff members or to assist in the preparation of tax returns. Staff members who need detailed tax advice and/or tax forms should refer to the www.un.org/tax website, which includes quick links to the Internet sites for IRS and state help services. Announcements United States income tax briefing sessions will be conducted in February 2017. Dates and venues will be announced through a broadcast message. Self-employment tax. All United States staff members who are liable to pay their share of self-employment tax on United Nations earnings are encouraged to enrol with the IRS Electronic Federal Tax Payment System (EFTPS) for their quarterly share of self-employment and other tax payments to the IRS. For 2016, the employee portion of the Social Security is equal to its previous rate of 6.2 per cent of wages, up to a maximum wage base of $118,500, and the Medicare tax rate remains 1.45 per cent on all wages. The Social Security tax for 2017 will remain unchanged. The self-employment tax rate for 2017 is as follows: Employee portion: 6.2 per cent of wage earnings, up to the maximum wage base of $127,200; Employer portion: 6.2 per cent of wage earnings, up to the maximum wage base of $127,200. The Medicare tax rate is 1.45 per cent each for the employee and the employer. There is no wage base limit for Medicare tax. There will be an additional Medicare tax of 0.9 per cent for employees if wages are or exceed $250,000 for a married individual filing a joint return, $125,000 for a married individual filing a separate return, and $200,000 for all others. Statement of taxable earnings: United States taxpaying staff members statements of taxable earnings will be sent to their individual e-mail addresses on record in the tax system. Staff members should contact the Income Tax Unit if they have not received their 2016 statements of taxable earnings by e-mail by 7 February 2017. 2/41

Staff members who have been assigned to serve in United Nations offices outside the United States during 2015, 2016 or 2017 should refer to IRS publication 54, the instructions for form 2555 and the special provisions and procedures specified in paragraphs 65 to 87 of the present information circular. Please visit the enhanced website www.un.org/tax, which contains useful information to help one better understand the United Nations tax system. 3/41

Contents Most frequently asked questions on income taxes in the United Nations.... 5 I. Introduction.... 12 II. United Nations policies on income tax reimbursement... 12 III. IV. A. Rationale for reimbursement of taxes levied on United Nations income.... 12 B. Requirements for applications for reimbursement or for advances to pay estimated taxes.. 13 C. Obligation to minimize tax liability.... 14 D. Issuance of tax cheques by the United Nations... 15 E. Limitation on retroactivity of claims for reimbursement of taxes.... 16 F. Policy regarding interest and penalties imposed by tax authorities... 16 G. Income tax assistance, inquiries and forms.... 17 H. Office to which settlement claims are to be submitted.... 17 Procedures for reimbursement of federal, state and municipal income taxes for calendar year 2016.... 18 A. Computation of reimbursement.... 18 B. Statement of taxable earnings... 18 C. Social Security numbers or individual taxpayer identification numbers... 20 D. Issuance of final 2016 tax payment cheques.... 21 E. Incomplete or incorrect applications.... 21 F. Overpayment of tax advances... 22 G. Timely filing of tax returns... 23 Advances for estimated federal, New York, Washington, D.C., Virginia or Maryland and New York City or Yonkers income taxes for calendar year 2017... 23 V. Social Security contributions (self-employment taxes)... 25 VI. VII. Special provisions and procedures applicable to staff members assigned to a United Nations office outside the United States.... 27 A. General comments.... 27 B. Filing deadlines.... 27 C. Foreign earned income and housing cost exclusions.... 28 D. Filing procedures for staff members who have qualified for or are likely to qualify for the foreign earned income exclusion for 2016.... 29 E. Requirements for amended tax returns in certain circumstances... 30 F. Tax advances for staff members on mission or assignment outside the United States... 31 G. Special provisions governing Social Security.... 31 Special provisions relating to staff members who have already separated from the United Nations or who are expected to separate from the United Nations in 201 7.... 31 Page 4/41

Most frequently asked questions on income taxes in the United Nations The answers to the following most frequently asked questions are explained in detail in sections I to VII of the present information circular. Please note that this is not an exhaustive list and therefore should not be used in lieu of the entire information circular. 1. What is the main purpose of the United Nations tax reimbursement system? The United States does not exempt the United Nations earnings of its taxpayers from taxes. The purpose of the reimbursement system is to place United Nations staff members subject to taxation in the position in which they would have been if their official emoluments were not taxed. Hence, it is intended neither to provide a benefit, nor to place the staff member at a disadvantage, in relation to other United Nations staff members who are not required to pay taxes to a Member State on their United Nations emoluments (see sect. I, paras. 3 and 4). 2. What is staff assessment, and how is it related to income taxes? Staff assessment is not a withholding tax. It is an amount deducted from all United Nations staff members gross pay according to the United Nations Staff Regulations and Rules, regardless of their nationality. As staff assessment is not a withholding tax, it cannot be reimbursed to staff members under any circumstances and it cannot be claimed as a deduction on United States income tax returns. Staff assessment deductions are credited to the Tax Equalization Fund. Those Member States that do not impose income tax on United Nations earnings receive a portion of the Tax Equalization Fund as an offset against their assessments for the United Nations regular budget, peacekeeping and tribunal budgets. When staff members have to pay national income taxes on their United Nations earnings, they are reimbursed from the Tax Equalization Fund irrespective of the total amount of staff assessment deducted from their salaries. 3. Who is subject to United States income taxation on United Nations earnings? United States citizens and permanent residents who have signed the Waiver of rights, privileges, exemptions and immunities (the waiver) are subject to United States income tax on their United Nations earnings (see sect. I, para. 1). In addition, United States citizens serving in the United States are also subject to selfemployment tax on their United Nations earnings. The United Nations reimburses those staff members who have to pay the United States income taxes due on their United Nations earnings as well as 6.2 per cent out of a total 12.4 per cent of the Social Security tax portion and 1.45 per cent out of a total 2.9 per cent of the Medicare tax portion of the related self-employment taxes payable by United States citizens. 4. Who has to pay self-employment tax, and what is a staff member s share? According to United States law, it is mandatory that all United States citizens serving in the United States pay self-employment tax on their United Nations earnings. United States citizens serving abroad who spend time on official duty in the United States are also subject to self-employment tax on the earnings for the 5/41

period worked in the United States. For 2016, the Social Security tax rate is 12.4 per cent of the Social Security wage base plus a Medicare tax rate of 2.9 per cent on all wages. The staff member will pay 6.2 per cent for Social Security tax and 1.45 per cent for Medicare tax. The Social Security wage base was $118,500 for 2016 and increased to $127,200 in 2017. There is an additional Medicare tax of 0.9 per cent for employees with earnings over $250,000 for a married individual filing a joint return, $125,000 for a married individual filing a separate return, and $200,000 for all others. The United Nations will normally reimburse one half of the self-employment tax due on United Nations taxable earnings as calculated on IRS schedule SE; a United States taxpaying staff member has to pay the other half. Additional Medicare tax (0.9 per cent), if applicable, is fully payable by the employee. 5. How does a staff member request (a) income tax advances and/or (b) income tax reimbursement from the United Nations? (a) To request income tax advances, a staff member subject to income taxation should complete United Nations form F.65 and submit it, together with a copy of his/her personnel action form, to the Income Tax Unit (see paras. 5 (b) -7). United States permanent residents should also provide the personnel action form reflecting the date when they signed the waiver; (b) To request tax reimbursement, a staff member must submit a photocopy of his/her complete set of income tax returns together with properly completed forms F.65, F.65/A (if applicable) and F.243 to the Income Tax Unit. Staff members who have received tax advances must submit annual requests for tax reimbursement within the deadline for submission. 6. What are the deadlines for submitting requests for income tax reimbursements to the United Nations and filing with United States tax authorities? The deadlines for the submission of requests for 2016 income tax reimbursement to the United Nations are 1 March 2017 for staff serving in the United States and 3 April 2017 for staff serving elsewhere. The Income Tax Unit must receive the requests by these deadlines to allow adequate time for processing and reimbursement before the actual filing deadline with the tax authorities. The deadlines for filing 2016 income tax returns with the tax authorities are 18 April 2017 for taxpayers in the United States and 15 June 2017 for overseas taxpayers. Requests for income tax reimbursement submitted after the submission deadlines ar e handled on a first-come, first-served basis. It should be noted that there is a one-year limitation on filing a claim for tax reimbursement (see para. 20). 7. How does the United Nations calculate income tax reimbursements due to staff members? Income tax reimbursements are made for the tax attributable to United Nations salary and emoluments. This tax is considered to be the difference between (a) the actual total tax payable for the year as shown in the copies of the tax return with the United Nations income (as shown on his/her statement of taxable earnings) included; and (b) the tax that would be payable if United Nations income were excluded from total income. Both calculations use the actual income, loss, adjustments to income, total deductions and exemptions claimed by the staff 6/41

member on his/her tax returns to arrive at the taxable income. The actual total tax payable in (a) is calculated by using the actual income, loss, adjustments to income, total deductions and exemptions claimed by the staff member on his/her tax returns. The tax that is payable if United Nations income is excluded in (b) is calculated by using the deductions and exemptions claimed by the staff member on his/her actual tax returns (see para. 27). To illustrate the United Nations income tax reimbursement, assume that a staff member and his/her spouse working outside the United Nations who filed as married filing jointly for 2016 had the following federal taxable income and were not subject to self-employment tax (amounts in United States dollars): Note: Phased-out exemptions and limitations of itemized deductions that may result from inclusion of United Nations earnings are not claimable. Premium, additional child and other tax credits (under payments on the second page of IRS form 1040) for which a staff member may be eligible on the basis of non-united Nations earnings alone, but for which a staff member is not eligible on the basis of actual total income, including United Nations earnings, are also not claimable. (i) Actual total tax payable on return United Nations earnings 73,000 Non-United Nations ordinary income 40,300 Less: Deductions (12,600) Less: Exemptions (4,050 x 2) (8,100) Taxable income 92,600 Federal tax 14, 692 (A) (ii) Tax payable without United Nations income Non-United Nations ordinary income 40,300 Less: Deductions (12,600) Less: Exemptions (4,050 x 2) (8,100) Taxable income 19,600 Federal tax 2,013 (B) United Nations federal income tax reimbursement = (A) - (B) = 14,692-2,013 = 12,679 8. What are estimated tax payments for? The United Nations does not have a tax withholding system. Staff members who are liable to pay federal, state or municipal income taxes for 2017 are required to file, by 18 April 2017, a declaration of estimated tax on their estimated 2017 income, including salary and emoluments to be received from the United Nations. In order to avoid the penalty for underpayment of estimated taxes for 2017, staff members, in most circumstances, will be required to pay in four equal instal ments as estimates of their 2017 federal tax the lesser of: (a) 100 per cent of their actual 2016 tax liability (including the self-employment tax); or (b) 90 per cent of their estimated 2017 tax liability (including the self-employment tax), due on 18 April 2017, 15 June 2017, 15 September 2017 and 15 January 2018. 7/41

Federal and New York state tax advances are paid directly to the IRS and New York State by the United Nations for crediting to the taxpayer s individual account as estimated tax payments. In exceptional cases where electronic payments are not possible, tax advance cheques payable to the tax authorities may be issued. Any advance for Washington, D.C., Virginia or Maryland state estimated taxes will be made by cheque payable to staff members, who should either endorse the cheques and send them promptly to the appropriate state tax authority or deposit the cheques into their personal bank accounts and issue their own cheques to pay for the estimated tax. It is the responsibility of staff members to include on their estimated tax forms their share of self-employment tax, if applicable, and estimates of additional taxable income from sources other than the United Nations and to pay the estimated tax due thereon. Note: High-income group taxpayers may be required to pay Net Investment Income Tax. This tax is the staff member s responsibility (for details please visit the IRS website or consult with a tax accountant). 9. What should a staff member do with United Nations tax cheques payable to the tax authorities? A staff member should forward any United Nations tax cheques made payable to the respective tax authorities to the appropriate addresses of the tax authorities. A staff member should not, under any circumstances, cash or deposit any United Nations tax cheques payable to the tax authority into his/her bank account. 10. What happens if the staff member pays the balance due before receiving United Nations tax cheques? If a staff member pays the balance due before receiving United Nations tax cheques, he/she should return to the Income Tax Unit the United Nations cheques payable to the tax authorities, together with proof that he/she paid the tax authorities (such as copies of his/her cancelled personal cheques). The Tax Unit will then reissue the United Nations tax cheques to his/her name. At times, tax reimbursement cheques made directly payable to a staff member may also be issued when the amount that a staff member paid to the IRS is larger than the total tax due on his/her outside income. Only tax cheques issued with the staff member s name as the sole payee may be cashed or deposited into his/her bank account. 11. Who gets the tax refund that a staff member receives from the tax authorities? Entitlement to tax refunds is dependent upon who overpays the tax authorities. A staff member may retain the tax refund that he/she receives from the tax authorities if he/she has more withholding tax on his/her non-united Nations income than his/her tax liabilities or if he/she overpays the tax authorities on the non-united Nations earnings. If the United Nations overpays the estimated income tax advances related to a staff member, the overpayment amount will be indicated on a transmittal statement to the staff member after the staff member s income tax reimbursement claim is settled. The United Nations treats these overpayments as prepayments of tax advances for the subsequent year. Staff members who continue to be subject to United States income taxes on the United Nations earnings should indicate on their tax returns that tax overpayment should be applied to the following year s estimated 8/41

taxes. Separated staff members should return the United Nations portion of ta x refunds to the Organization. 12. Who pays the penalties and interest imposed by tax authorities? As the responsibility for filing complete, correct and timely tax returns is that of the individual taxpayer, the United Nations will not reimburse staff members for penalties and/or interest imposed by tax authorities on their United Nations earnings except if: (a) the delays are attributable to the Organization; or (b) penalties or interest are the result of written instructions given by the United Nations. Under certain conditions, staff members serving outside the United States may also be reimbursed for penalties and interest (see para. 68). The United Nations will not pay any late filing penalties under any circumstances. Staff members are, therefor e, advised to file the appropriate extension forms with tax authorities before the deadline for filing. 13. What action is taken by the United Nations Income Tax Unit if a staff member makes an error in his/her tax returns? If the Income Tax Unit, in the course of processing a staff member s request for reimbursements, determines that there is an error, it will issue to the staff member a written notice of corrections to be made to the tax return(s) by the staff member. Staff members are required to acknowledge and certify that they have made the appropriate changes on their tax returns submitted to the tax authorities, and to return the certified correction notification, together with a copy of the corrected tax forms, to the Income Tax Unit. Staff members should not, however, rely on the Income Tax Unit to detect errors. They remain fully responsible for filing correct returns with the tax authorities. It should be noted that by completing United Nations form F.243 (Consent for the Internal Revenue Service to disclose tax return information to the United Nations), a staff member authorizes the IRS to disclose to the United Nations tax information and estimated tax payments regarding his/her federal income tax account(s) for the particular tax years if and when the United Nations requests this information. The tax information is used only to ascertain that the staff member who submits photocopies of his/her income tax returns to the Income Tax Unit also files the same income tax returns with the IRS. It does not imply that the staff member s federal income tax returns are completely correct and accepted by the IRS. Nor does it imply that the United Nations is obligated to verify the validity of each claim submitted to the Income Tax Unit with the tax authorities. 14. Under what circumstances can a married staff member file separately? Generally, if a married staff member is not receiving dependency benefits for his/her spouse, he or she can elect to file separately. If the staff member uses itemized deductions that are less than the standard deduction, the United Nations will calculate the reimbursement using the standard deduction. If a staff member files separately while receiving dependency benefits for his/her spouse, the United Nations reimbursement of income taxes will be calculated as if he/she is filing a joint return with the spouse (see para. 12). 9/41

15. Does a staff member have to claim dependants for whom he or she receives dependency benefits from the United Nations? A staff member who has received United Nations dependency benefits for his/her spouse, children or relatives residing in the United States is required to claim the appropriate exemptions for the dependants, or provide acceptable written explanation as to the reason for not doing so (see para. 14). 16. Should a staff member submit a copy of his/her income tax return to the United Nations Income Tax Unit if he or she is stationed abroad and does not have any federal tax due in respect of United Nations earnings? It is advisable for the staff member to submit a photocopy of his/her income tax return to the Income Tax Unit, even if he/she fully qualifies under the foreign earned income exclusion (FEIE) and may not have any tax liabilities. It provides a continuous record for his/her tax file, and, in instances of subsequent amendments, he/she can submit an amended return to the Income Tax Unit for reimbursement. 17. How does one enrol with EFTPS? What information needs to be communicated to the Income Tax Unit? Forms and instructions for enrolling with EFTPS are available online at www.eftps.gov. A copy of the EFTPS enrolment status letter that contains the PIN must be provided to the Income Tax Unit (PIN may be blacked out). 18. Can the Income Tax Unit prepare my tax return or provide tax/financial advice? Staff members of the Income Tax Unit are not permitted to provide tax advice to staff members or to assist in the preparation of tax returns. As the individual taxpayer remains fully responsible for filing correct returns with the tax authorities, he/she should not rely on the Income Tax Unit to detect errors. The United Nations cannot (a) provide advice or assistance to staff members on tax matters other than in relation to the treatment of taxable United Nations earnings included in the statement of taxable earnings; or (b) contact tax authorities on a staff member s behalf. 19. May I receive a copy of my tax return? Regrettably, the Income Tax Unit is unable to provide a copy of either the tax claim or the correspondence with the tax authorities that has been submitted by the taxpayer. In this regard, it is expected that staff members will retain a copy of their tax returns, all correspondence with the tax authorities and the corresponding financial documents and records. 20. Do all staff members paying United States income tax receive estimated tax advances? No estimated tax advances will be issued to staff members who are working under an initial appointment contract with the United Nations of less than six months duration or under a WAE (when actually employed) contract. The United Nations will reimburse any penalty incurred by staff members related to underpayment of estimated taxes on such United Nations income. 10/41

21. I have refugee/political asylum status and a valid work permit but am not a permanent resident of the United States or a United States citizen. Should I pay tax on United Nations emoluments? No. United Nations staff members who have employment authorization in the United States (a work permit) and who have refugee/political asylum status are exempt from income taxation by the United States on their United Nations earnings, as long as they have not been granted permanent residency status in the United States (alien registration card) and sign the waiver of rights, privileges, exemptions and immunities under the Convention on the Privileges and Immunities of the United Nations. 11/41

I. Introduction 1. A staff member who is a United States citizen or a permanent resident ( green card holder) who has signed the Waiver of rights, privileges, exemptions and immunities (the waiver) is subject to income taxation by the United States on his or her earnings from the United Nations (see ST/AI/1998/1). According to the United States Immigration and Nationality Act of 1952, the waiver should be signed within 10 days of receiving notification of admission for permanent residence or joining the Organization. Staff members must obtain approval from their human resources office (Office of Human Resources Management, New York, for all United Nations staff members) in writing before signing the waiver. The main criterion of determination by the United Nations of entitlement to reimbursement of income taxes is the staff member s nationality and/or resident status registered with the United Nations, regardless of the staff member s official nationality. It is the staff member s personal responsibility to ascertain and meet his or her legal obligations, if any, arising under United States federal, state and municipal income tax laws. 2. A staff member who is liable for such taxes for 2016 and/or 2017 and who wishes to claim reimbursement from the United Nations may apply for reimbursement of such taxes in accordance with the procedures set out in the present information circular. II. United Nations policies on income tax reimbursement A. Rationale for reimbursement of taxes levied on United Nations income 3. Most Member States, by acceding to section 18 (b) of the Convention on the Privileges and Immunities of the United Nations, have exempted United Nations staff members from national taxation of their official emoluments. A few Member States have not done so, and staff members from those Member States may thus be required to pay taxes on their United Nations income. In the interest of equity, the General Assembly established a system to reimburse income taxes to those United Nations staff members who are required to pay taxes in respect of salaries or other emoluments that they receive from the United Nations. 4. The purpose of the United Nations income tax reimbursement system is to place United Nations staff members subject to taxation in the financial position in which they would find themselves if their United Nations remuneration were not taxed. It is not intended that the staff member should derive a benefit or be placed at a disadvantage vis-à-vis other United Nations staff members whose United Nations remunerations are not subject to taxation. The scope of the income tax reimbursement system is limited to the reimbursement of taxes actually paid or actually due to the United States tax authorities. The staff member is required to minimize his or her tax liability before requesting reimbursement from the Income Tax Unit. The tax liability taken into account by the Income Tax Unit is correspondingly limited to taxes paid or due when the staff member has fulfilled this obligation. When a staff member s tax liability is reduced as a result of the application of credits, deductions or exemptions, the staff member cannot claim and will not be reimbursed for any amount in excess of his or her actual net tax liability, regardless of the source of earnings United Nations or external to the United 12/41

Nations with which the credits, deductions or exemptions are associated. The copy of the tax return submitted to the Income Tax Unit must be a copy of the tax return actually filed with the United States tax authorities. United Nations staff regulation 3.3 (f) (i) stipulates that in no case shall the reimbursement by the United Nations exceed the final income taxes actually paid and payable in respect of a staff member s United Nations income. B. Requirements for applications for reimbursement or for advances to pay estimated taxes 5. Staff members must submit to the Income Tax Unit, Room FF-300, the following: (a) For reimbursement of 2016 federal, state or municipal taxes: (i) A request for settlement of income taxes (United Nations form F.65 plus form F.65/A, if applicable); (ii) A consent for the IRS to disclose certain tax return information to the United Nations (United Nations form F.243); (iii) True, complete and signed copies of the relevant income tax returns and supporting information for the tax year for which reimbursement is requested, including a copy of the statement of taxable earnings; (iv) For states other than New York, New Jersey, Connecticut, Maryland and Virginia and for Washington, D.C., or for municipal authorities other than New York City or Yonkers, the tax rates and relevant instructions issued by the tax authority must be attached to the application; (b) For advances to pay 2017 estimated taxes: a request for 2017 income tax advances (United Nations form F.65 plus form F.65/A, if applicable). 6. All applicable spaces on the forms F.65, F.65/A and F.243 must be filled in completely. The Income Tax Unit relies on such information, such as home address, e-mail address, office location and telephone extension, in order to facilitate communication with staff members. Information regarding form F.65 can be found at the back of the form that is included in the present ST/IC circular. Every United States taxpaying staff member is required to read it carefully for successful completion of the form. Instructions are also included at the beginning of forms F.65, F.65/A and F.243. Form F.65 7. By submitting form F.65, staff members authorize the United Nations to make federal and state tax advance deposits on their behalf. In signing form F.65, staff members certify and undertake very specific obligations listed on the form as a condition of receiving reimbursements or advances. Failure to adhere to these obligations may result in: (a) suspension of issuance of further tax reimbursements; (b) recovery of amounts already advanced and/or paid; and (c) possible disciplinary action. 13/41

Form F.243 8. In completing and signing form F.243, a staff member consents to authorize the IRS to disclose certain tax information to the United Nations for verifying actual income taxes paid to the United States. This consent may be revoked within 75 days of signature; however, if consent is revoked, the staff member must immediately repay to the United Nations the entire amount of any tax reimbursements and advances for all the tax years to which the revocation applies. If repayment of any tax reimbursements and advances is not made promptly, these amounts may be deducted, pursuant to staff rule 3.18, from future payments by the Organization of salaries and other emoluments, including separation entitlements, and disciplinary action may also be taken as appropriate. Normally, the completion of one form F.243 at the time of application for reimbursement will be sufficient for the whole year; however, staff members may be required to complete and sign another form F.243 at any time during the year if the original form F.243 is not deemed acceptable by the IRS. IRS requirements regarding form F.243 9. Form F.243 must be filed with no changes or alterations except as specified in the directions at the bottom of the form. The use of correction fluid or any subsequent corrections to form F.243 are not permitted. Form F.243 must be completed in ink and is not acceptable in pencil. Please adhere to the standard American dating format of month/day/year, e.g., 06/15/2017, and not the normal United Nations format, when completing form F.243. The IRS will not accept form F.243 if it does not follow the standard American dating format. If you are filing a joint return, your spouse s Social Security number must be on form F.243, whether your spouse is a staff member or not. 10. Any changes to form F.243 or non-adherence to the above requirements will result in rejection of the tax reimbursement claim and/or delays in the processing of the claim. In cases where a staff member has filed a claim for reimbursement of income taxes that must be returned by the Income Tax Unit because of an error or some other deficiency, the staff member will receive a notice of correction/rejection. If the staff member fails to respond to the notice of correction/rejection in a timely manner, there may be substantial delays in processing the reimbursement request, for which the United Nations will not accept any responsibility. C. Obligation to minimize tax liability 11. In order to minimize the burden on the Tax Equalization Fund, of which the Secretary-General is the trustee, and on voluntary funds from which tax reimbursements may be made, a staff member claiming reimbursement is required to make maximum use of all adjustments to income, deductions and exemptions in order to minimize his or her tax liability. In claiming a reimbursement from the United Nations in form F.65, a staff member, inter alia, certifies and agrees that he or she will minimize his or her taxes. 12. For married staff members, the filing of joint tax returns in most cases results in a lower tax liability both for the staff member and for the United Nations. Married staff members who are both United States taxpayers must use married filing jointly status when filing their 2016 income tax returns. In addition, staff members who receive dependency benefits from the United Nations for their spouse must also file 14/41

jointly. If (a) tax return(s) with filing status other than married filing jointly is/are submitted by a staff member in receipt of dependency benefits for a spouse, the final reimbursement of income taxes will be calculated using the greater of the standard deduction for married filing jointly for the tax year in question or the actual amount of the itemized deduction claimed. The married filing jointly tax rate will be used to calculate the taxes due. Filing of joint federal returns by citizens and resident aliens with spouses who are non-resident aliens but have tax identification numbers is permitted. New York state income tax laws require that taxpayers who file joint federal returns must, with very few exceptions, file joint New York state returns. 13. Staff members are required to claim itemized deductions if these would exceed the standard deductions allowable. Staff members should refer to the specific instructions issued by the tax authorities for items of deductions allowed. If a staff member does not claim itemized deductions and it is determined by the United Nations that itemizing deductions would result in a lower tax, the tax returns will be rejected as incomplete, and he or she will be required to resubmit the corrected returns with an itemized deduction schedule. 14. Staff members who have received United Nations dependency benefits for their relatives residing in the United States are required to claim the appropriate exemptions for the dependants, or provide an acceptable written explanation along with the tax reimbursement claim as to the reason for not doing so. Staff members can claim personal exemption for their non-resident alien spouse, provided the spouse has an individual taxpayer identification number (ITIN) or a Social Security number and does not have a gross income for United States tax purposes as per IRS publication 519. D. Issuance of tax cheques by the United Nations 15. For those not enrolled in EFTPS, cheques will be issued as the final settlement or as advances for federal or state or municipal income tax liabilities attributable to United Nations earnings, and the cheques are made payable to the income tax authority. The staff member must forward any such cheques immediately to the appropriate tax authority. Cheques payable to a tax authority must never, under any circumstances, be deposited into a personal account. 16. Failure to forward cheques made payable to the tax authorities promptly to the appropriate tax authorities may result in the suspension of the issuance of future tax payments. Depositing a cheque made payable to a tax authority into a personal account may result in the suspension of the issuance of future tax payments, recovery of amounts already advanced and/or paid and possible disciplinary action. 17. An exception to the United Nations procedure of issuing cheques payable to the tax authorities will be made only if the staff member provides proof that full payment of income tax settlements (except for the estimated tax advances for the current year) has already been made at the time the claim is submitted. Proof of payment means copies of both sides of cancelled cheques made payable to the tax authorities or certified transcripts of taxpayer accounts. When a staff member provides such proof of prior payment at the time of the submission of his or her claim, a cheque payable to the staff member will be issued. Any claims for reimbursement of income taxes that request a cheque made payable to the staff 15/41

member but do not provide acceptable proof of payment will not be honoured. Cheque(s) will be distributed through normal channels unless indicated otherwise in form F.65. If indicated otherwise in form F.65, the United Nations staff members who have access to Umoja Employee Self-Service must update their address in Umoja. In such cases, addresses of all other staff (e.g., staff of the United Nations Development Programme (UNDP), the World Health Organization (WHO), etc., and separated United Nations staff) will be updated in Umoja by the Income Tax Unit. 18. The tax authorities require each taxpayer to enter his or her Social Security number on each cheque so that the tax authority can credit the cheque to the correct account. Staff members should verify that the Social Security number printed on the face of each tax cheque is correct. Married staff members should always write their own Social Security number on any cheque issued by the United Nations and not the Social Security number of their spouse. Staff members are urged to keep a record of the number of each tax cheque received from the United Nations. Copies of cancelled cheques within three years from the dates of issuance can be obtained by providing the United Nations with the actual cheque numbers, together with an acceptable justification for the request. 19. Tax cheques are generally issued approximately two weeks before the estimated tax payment and annual tax filing due dates. Staff members who expect to be on official travel or leave on the date that tax cheques are expected to be issued should make prior arrangements with their executive officers, so that they can send their cheques to the appropriate tax authorities before the due date. It is not possible for the Income Tax Unit to accommodate requests for early issuance of cheques. E. Limitation on retroactivity of claims for reimbursement of taxes 20. The reimbursement of income taxes shall be deemed to be claimable by staff members on the last date on which their return for a particular year must be filed with the tax authority, without any extension of time for filing other than the automatic extension for staff serving abroad. In accordance with staff rule 3.17 (ii), no claims for reimbursement of taxes will be entertained beyond one year after that date, unless the United Nations accepts that there are extenuating circumstances. In such cases, a staff member may request that the time limit in staff rule 3.17 (ii) be waived, and support such a request with a written explanation for the delay. Staff members will be required to submit sufficient documentary proof of the actual tax returns filed with the respective tax authorities. F. Policy regarding interest and penalties imposed by tax authorities 21. As the responsibility for filing complete, correct and timely tax returns and estimated tax payments with any amounts due is that of the individual taxpayer, the United Nations will not reimburse staff members for interest or penalties imposed by tax authorities on their United Nations earnings. There are three exceptions to this rule. The United Nations may reimburse late-payment and/or underpayment interest and penalty charges that arise from: (a) delays or incorrect written instructions or incorrect earnings data that are acknowledged by the United Nations as being the responsibility of the Organization; (b) extensions for staff members serving the United Nations outside the United States; or (c) underpayment of tax advances by the United Nations under the provisions of paragraph 51 (c), (d) and (e) 16/41

below. The United Nations will not pay any late filing penalties under any circumstances. G. Income tax assistance, inquiries and forms 22. Neither the United Nations nor the United Nations Joint Staff Pension Fund can (a) provide advice or assistance to staff members on tax matters other than in relation to the treatment of taxable United Nations earnings included in the statement of taxable earnings; or (b) communicate directly with tax authorities on a staff member s behalf. Under the provisions of staff regulation 1.2, staff members are not permitted to provide assistance in income tax matters to other staff members for remuneration without the prior approval of the Secretary-General. 23. Should advice be needed on aspects of income tax returns not related to the United Nations, staff members should consult the appropriate income tax authorities or tax preparation services. Staff members may wish to obtain a free copy of publication 17, entitled Your Federal Income Tax (For Individuals), which is issued annually by the IRS. Specific contact information on all general tax matters may be obtained by accessing the www.un.org/tax website. 24. Most forms required for the filing of federal and state returns are available from libraries, post offices and specialized government Internet sites. The Income Tax Unit will attempt to maintain a limited supply of a few basic forms outside room FF-300. These will be available to staff members on a first-come, first-served basis; however, most tax forms will have to be obtained directly from the appropriate tax authorities. Information about obtaining tax forms can be found by accessing the www.un.org/tax website. H. Office to which settlement claims are to be submitted 25. All staff members requesting reimbursement of income taxes for the calendar year 2016 should submit completed applications to the Income Tax Unit of the Accounts Division, Room FF-300, and keep copies of their tax returns and related documents for their records. The Income Tax Unit does not keep copies of staff members tax returns for more than seven years after their respective due dates for filing with the tax authorities. The client service area is open daily for income tax inquiries from 1 p.m. to 4 p.m., except on Wednesday, when it is open from 9.30 a.m. to 4 p.m. During the period from 3 to 18 April 2017, the client service area will be open for tax inquiries from 9 a.m. to 5 p.m. Inquiries may also be made by e -mail, the preferred method (tax@un.org), or by fax (917-367-1997). Staff members outside the United States who need more information or assistance may contact the Income Tax Unit by e-mail, fax or letter or may visit the Tax Unit website (www.un.org/tax). 17/41

III. Procedures for reimbursement of federal, state and municipal income taxes for calendar year 2016 A. Computation of reimbursement 26. The method of computing the federal, state and municipal taxes payable on United Nations earnings and, thus, the amount that the United Nations will reimburse to a staff member is as follows. The tax attributable to United Nations salary and emoluments is considered to be the difference between: (a) the total tax payable for the year as shown in the copies of the tax return submitted by the staff member with the United Nations income (as shown on the statement of taxable earnings) included; and (b) the tax that would be payable if United Nations income were excluded from total income. The taxable amount of pension withdrawal settlement shown on the statement of taxable earnings for staff members who joined the Organization after 31 December 1979 will be treated as non-united Nations income in accordance with General Assembly resolution 34/165 of 17 December 1979 (see para. 93 below). 27. Both calculations (a) and (b) in paragraph 26 above use the actual income, loss, adjustments to income, total deductions and exemptions claimed by the staff member on his or her tax return(s) to arrive at the taxable income. The limitation of exemption that results from including United Nations earnings in alternative minimum taxable income is taken into consideration for the calculation of reimbursement of alternative minimum tax. The adjustment to income for the United Nations reimbursement portion of the self-employment tax (see para. 60 below) is considered to be an adjustment to United Nations income to the extent that this selfemployment tax is attributable to United Nations income. Additional deductions such as moving expenses may also reduce the United Nations income used in the calculation noted in paragraph 26 above. Effective from 2012, staff members are not required to use foreign tax credit to offset their tax liability attributable to United Nations income on their federal tax returns. However, if staff members claim the foreign tax credit as well as any other tax credits available on the actual tax returns with United Nations income, such as education credits, child tax credit, child and dependant care credit, elderly and disabled credit, New York City school tax credit and various state and city tax credits, all credits will be applied to reduce the total income tax liability without the United Nations income which do not affect the calculations noted in paragraph 26 above. In this regard, if a staff member claims a foreign tax credit to offset tax on United Nations income, he/she shall not be eligible to receive reimbursement against foreign tax credit applied to reduce the income tax on United Nations income. Additional Medicare tax and net investment income tax are employees responsibility and are not reimbursed by the United Nations. B. Statement of taxable earnings 28. A staff member who is subject to United States taxes will receive a detailed statement of his or her United Nations taxable earnings for 2016 through his/her e-mail address on record in the tax system. The statement will be issued by 31 January 2017. 29. A staff member who is required to file a United States federal income tax return and who was payrolled at any time in 2016 by the Economic Commission for 18/41

Africa, the Economic Commission for Latin America and the Caribbean, the Economic and Social Commission for Asia and the Pacific, the Economic and Social Commission for Western Asia, the United Nations Office at Nairobi, the United Nations Office at Geneva, the United Nations Office at Vienna, the Office of the United Nations High Commissioner for Refugees, the United Nations Relief and Works Agency for Palestine Refugees in the Near East, UNDP, the United Nations Children s Fund, WHO, the Pan American Health Organization, the Organization for the Prohibition of Chemical Weapons or the International Tribunals and International Court of Justice in The Hague will also receive a statement of his/her United Nations taxable earnings directly from the Income Tax Unit through his/her e-mail address and may obtain a copy from the finance office at that location. Staff members who were on the payrolls of more than one office during 2016 should receive a separate statement of taxable earnings from each office. Their total United Nations taxable income is the sum total from all such statements. 30. Staff members should note that at the bottom of the statement of taxable earnings there is a paragraph explaining that, since remuneration from an international organization is not subject to withholding, the United Nations is exempt from issuing a wage and tax statement (IRS form W-2) per se. While it is not a requirement of the IRS or state/local tax authorities, staff members may wish to attach a copy of the United Nations statement of taxable earnings to the income tax returns that they file with the appropriate tax authorities. A copy of the statement(s) of taxable earnings must be attached to the copy of the returns included with the request for reimbursement of taxes. 31. The following types of payments made by the United Nations to staff members during the calendar year 2016 are included in the statement of taxable earnings for 2016: (a) (b) (c) (d) (e) Gross salary (before the deduction of staff assessment); Overtime, compensatory time and night differential; Post adjustment; Dependency allowance; Language allowance; (f) Mobility and hardship allowance (including hazard pay and/or non-family hardship element and/or danger pay, where applicable); (g) (h) (i) (j) (k) (l) Representation allowance; Education grant; Assignment grant; Travel on appointment and/or separation; Removal of personal household effects and goods; Home leave travel; (m) Rental subsidy; (n) (o) Termination indemnity and compensation in lieu of notice; Commutation of accrued annual leave paid at separation; 19/41